Let's Get Organized - Accounts Payable

Accounts Payable aka Vendor Bills

1. When bills come in the mail, code them with the job and code (roofing, siding, etc) and enter them daily into your accounting software as an accounts payable bill.
2. File them in an A-Z accordion folder that is labeled "Accounts Payable or Bills to Pay".
3. Twice a month (weekly or monthly) when it's time to pay bills, print an open payables report to choose what you want to pay, pull the bills from your blue accordion folder and select the bills in your software to be printed.
4. Print checks using three part checks (body, stub, stub or similar). After checks are printed, use window envelopes to mail the checks to the vendor.
5. Staple the bottom stub from each check you printed to the group of bills they are paying.
6. File each vendors paid bills (with check stub attached) in the appropriate "paid bill file folder" (see below).

This may be contrary to what many contractors want to do, but something I highly recommend. Job reports can be printed for the job file showing all job costs including paid and unpaid bills and more. By stapling all bills together with the check stub, they are all in one place and you can always go to the same location to find them. Waivers if printed with the bills can be filed in the job folder, or even in the paid bill folder. You will know where to get them if you need them, many times, you won't need them unless liens are filed. At the end of the year, the paid Bills folders can be stored away and new file folders created for the new year.

File paid bills in file folders labeled for each letter and/or for your major vendors:

"ABC Electric, Paid 2009"
"A-Misc, Paid 2009"
"B-Misc, Paid 2009"

Email sarah@successif.biz if you would like a word document ready for printing onto labels of your "Alpha- Misc Paid 2009" file folders.

Getting to 100% Complete on Jobs

Following is a repost of an earlier blog post, I have many contractors ask about this process:

Most software written for construction will automatically calculate a percentage complete on a job. This percentage is a percentage of actual costs to the job budget. If you haven't entered a budget, most software will calculate the percentage as 100% because it will assume your budget should be what your costs are. The way to avoid this problem of course is to be sure you enter a budget for every job.

Another challenge in construction is to get the calculation to 100% complete when the job truly is complete. It is rare that a jobs cost is equal to its budget. There will most always be a slight variance. I recommend the following when a job is complete.

1. Set up a cost code or tracking code called "over/under budget".
2. Review the job (see previous blog) to be sure it is complete.
3. Enter an internal change order (which only posts to budget, not to contract amount) for the amount of the difference so that you force the budget to equal the final costs.

Be sure to record the amount in #3 to the code called "over/under budget", this preserves your original budget figures and also allows you to see your "over/under budget" amount by job at any time which would be a great report to view by Project Manager, Estimator or Crew Leader over a specific length of time.

Taking the next step

You've purchased new accounting software, you may even have integrated estimating software and may be sending your bids from the estimating package to the accounting package. Wonderful, you have done well. Now you are ready for the next step. Some of the setup procedures that sometimes take a back seat to be done later may need to be reviewed. Now is a good time to choose one more task to get you closer to your goals:

• General Ledger Budgets - set up projections for income and expense accounts to keep the numbers in check and make it easy to review on a monthly basis.
• Statement of Cash Flow - is it set up, do you know how to read it?
• Fine tune your Chart of Accounts - get rid of accounts that were ".. in your software" and are not used by your company, summarize some accounts so that your income statement is clean, or your balance sheet includes totals of all vehicle loans allowing you to refer to supporting schedules for a detailed list.
• Do you have a remote data backup procedure in place? Put the responsibility in a reliable companies hands to be sure you have a good backup on a daily basis. The benefit far outweighs the cost.
• Is your equipment in good shape and up to par? RAM is very inexpensive these days, good network cards are worth their weight in gold and also inexpensive.
• Is it time to review jobs that need to be closed? Set up procedures for reviewing closed jobs and mark them closed in your software.
• Are you current in your monthly closings? Are procedures written down? Does everyone know their duties as it relates to this important task?
• If you are using QuickBooks, are your items clean and directed to the proper GL accounts.
• Have you scanned your logo and are you using it on your reports? Do your reports look like you want them to look?

Keeping up with Technology

Recently one of my on-going customers called asking for assistance. I hadn't talked to them in several months and was happy to hear from them, not just for business, but because I enjoy their friendship. Their question could not be defined as just software assistance or accounting assistance, it is sometimes a blurred distinction between the two because one leads into the other.

What intrigued me was when she said "Sarah, will there ever be a time when I will not have to learn new things?". My response was of course "no, that's what keeps us young and keeps our mind active".

As much as we don't want to sometimes, learning is the livelihood of our lives.

We are learning as babies, playing with our toys. We have to change the toys babies play with every 6 weeks because they get bored with the ones they have mastered.

We move through our school years being challenged to learn more, sometimes feeling overwhelmed but always trying to do our best, then moving on to another level, grade, certification or degree.

Some of us learn pottery, sports or to challenge our bodies with physical fitness.

We become parents and most times, are not taught how to be a parent. We learn from others who are parents, maybe learning not to do what they have done, but more often, modeling those who we respect and have raised children we would love to have as our own. Then, we become grandparents, we learn to be quiet until asked, we learn to watch our children learn and we look upon learning in a different way, as one of the many circles of life.

We retire and take pride in hobbies we have had , like woodworking or golfing until we become challenged with physical limitations, then we learn to adapt to those hobbies that our bodies will allow us to tackle. We learn, that limitations are just another challenge to overcome.

So, why in our work would we expect learning to be any different? We learn our jobs, then the tax rules change, the software is updated, the economy requires we manage our business differently.

Always, we are learning and as long as we take on the challenge as something positive, we will be rewarded with a sharp mind and a positive role model for others who just might be watching silently from a distance.

Adjusting Journal Entries from your CPA

As a consultant for many small businesses, it really bothers me when a CPA does not make sure after the tax return has been done that the client’s books match the tax return. Most small businesses don’t understand or realize the importance of this. Many small businesses rely on their CPA for accurate numbers, not realizing that they should and could have financials that match their CPA records at their fingertips, on their own computer.

Adjusting journal entries are entries that are done once your CPA reviews your books and makes any changes before filing your tax return. These adjusting journal entries should be given to you along with your tax return. They will include depreciation (if not previously posted), may include changes to fixed assets and prepaid expenses as well as loans if the interest expense had to be adjusted. If any personal expenses were paid from the business the adjustments will also include changes to the owners equity.

Your CPA works for you, ask for your adjusting journal entries and post them in your books if the CPA hasn’t done that for you. If you need help, we can help at Success In-Formation LLC.

QuickBooks Question & Answer Session

Anyone interested in a QuickBooks Question & Answer Session on a Saturday or an evening, please email me at info@successif.biz. Remember to tell me your time zone when you tell me your preferred time.

Our most recent Q & A sessions have only drawn one person. I'd like to pool some people together for a group session. There are always good questions when there is a group.

The session is free for 90 minutes.

Communicating accross Generations

You can see here, why I have been amiss about posting on this blog. I am a new Grandmother. Here, my granddaughter is less than a week old and for a few minutes, we communicated in our own way.

I spent just over two weeks with my daughter and her husband before, during and after the delivery of Victoria Tate. I learned just how much things change through the years. I remember my mother being with me when I was having children and she must have been thinking the same thing. You'd think that things like having babies and nursing would be so natural that they would be done the same across generations. But this is not the case, innovations in baby care, clothes, toys, re-discovered (by me at least) herbs, salves, diapers (no pins anymore even for cloth diapers). It didn't take long for me to realize that the old school way was my way and I suddenly felt my age, I guess I should, I'm a grandma.

So many times we want to do things because we know they work. Because we are used to doing something a certain way. It doesn't always mean it's the right way and it might not be the wrong way, but there might be a better way if we are open to listening, watching and learning.